14.	RETIREMENT PLANS

Multi-employer Defined Benefit Plan

Pension benefits for substantially all of the Company’s Alaska-based employees are provided through the AEPF. The Company pays the AEPF a contractual hourly amount based on employee classification or base compensation. As a multi-employer defined benefit plan, the accumulated benefits and plan assets are

not

determined for, or allocated separately to, the individual employer.

The following table provides additional information about the AEPF multi-employer pension plan.

Plan name	Alaska Electrical Pension Plan
Employer Identification Number	92-6005171
Pension plan number	001
Pension Protection Act zone status at the plan's year-end:
December 31, 2019	Green
December 31, 2018	Green
Plan subject to funding improvement plan	No
Plan subject to rehabilitation plan	No
Employer subject to contribution surcharge	No
			Greater than 5%
			of Total
			Contributions
Company contributions to the plan for the year ended:			to the Plan
December 31, 2019	$	6,588	Yes
December 31, 2018	$	6,492	Yes

Name and expiration date of collective bargaining agreements requiring contributions to the plan:

Collective Bargaining Agreement Between Alaska Communications Systems and Local Union 1547 IBEW	December 31, 2023

Outside Agreement Alaska Electrical Construction between Local Union 1547 IBEW and Alaska Chapter National Electrical Contractors Association Inc.	June 30, 2022

Inside Agreement Alaska Electrical Construction between Local Union 1547 IBEW and Alaska Chapter National Electrical Contractors Association Inc.	October 31, 2022

The Company cannot accurately project any change in the plan status in future years given the uncertainty of economic conditions or the effect of actuarial valuations versus actual performance in the market. Minimum required future contributions to the AEPF are subject to the number of employees in each classification and/or base compensation of employees in future years.

Defined Contribution Plan

The Company provides a

401

(k) retirement savings plan covering substantially all of its employees. The plan allows for discretionary contributions as determined by the Board of Directors, subject to Internal Revenue Code limitations. The Company made a

$288

and

$209

matching contribution in

2019

and

2018,

respectively.

Defined Benefit Plan

The Company has a separate defined benefit plan that covers certain employees previously employed by Century Telephone Enterprise, Inc. ("CenturyTel Plan"). This plan was transferred to the Company in connection with the acquisition of CenturyTel, Inc.’s Alaska properties, whereby assets and liabilities of the CenturyTel Plan were transferred to the ACS Retirement Plan (“Plan”) on

September 1, 1999.

Accrued benefits under the Plan were determined in accordance with the provisions of the CenturyTel Plan and upon completion of the transfer, covered employees ceased to accrue benefits under the CenturyTel Plan. On

November 1, 2000,

the Plan was amended to conform early retirement reduction factors and various other terms to those provided by the AEPF. The Company uses the traditional unit credit method for the determination of pension cost for financial reporting and funding purposes and complies with the funding requirements under the Employee Retirement Income Security Act of

1974,

as amended ("ERISA"). The Company uses a

December 31

measurement date for the Plan. The Plan is

not

adequately funded under ERISA at

December 31, 2019.

The Company contributed

$81

to the Plan in

2019

and

$192

2018.

The Company plans to contribute approximately

$889

to the Plan in

2020

and management is also estimating what additional contributions the Company

may

be required to make in subsequent years in the event the value of the Plan’s assets remain volatile or decline.

The following is a calculation of the funded status of the ACS Retirement Plan using beginning and ending balances for

2019

and

2018

for the projected benefit obligation and the plan assets:

	2019			2018
Change in benefit obligation:
Benefit obligation at beginning of year	$	14,499		$	15,798
Interest cost		604			566
Actuarial loss (gain)		1,221			(872	)
Benefits paid		(1,166	)		(993	)
Benefit obligation at end of year		15,158			14,499

Change in plan assets:
Fair value of plan assets at beginning of year		10,871			12,534
Actual return (loss) on plan assets		1,662			(863	)
Employer contribution		81			192
Benefits paid		(1,166	)		(992	)
Fair value of plan assets at end of year		11,448			10,871

Funded status	$	(3,710	)	$	(3,628	)

The Plan’s projected benefit obligation equals its accumulated benefit obligation. The

2019

and

2018

liability balance of

$3,710

and

$3,628

respectively, is recorded on the Consolidated Balance Sheets in “Other long-term liabilities.”

In the

third

quarter of

2019,

the Company concluded that almost all participants in the Plan are inactive through either retirement or termination. In accordance with ASC

715,

“Compensation – Retirement Benefits,” the amortization period for certain costs associated with the Plan was changed from the expected future working lifetime of current active employees covered by the Plan to the expected future lifetime of inactive participants. This change was applied effective

January 1, 2019.

The amortization of loss in the table below reflects a

$352

credit recorded in the

third

quarter of

2019

for the cumulative effect of the change.

Net periodic pension expense is reported as a component of “Other income (expense), net” in the Statement of Comprehensive Income. The following table presents the net periodic pension expense for the Plan for

2019

and

2018:

	2019			2018
Interest cost	$	604		$	566
Expected return on plan assets		(678	)		(792	)
Amortization of loss		141			451
Net periodic pension expense	$	67		$	225

2020,

the Company expects amortization of net losses of

$143.

			2019				2018
Loss recognized as a component of accumulated other comprehensive loss:			$	4,289			$	4,191

The assumptions used to account for the Plan as of

December 31, 2019

and

2018

are as follows:

	2019			2018
Discount rate for benefit obligation		3.20	%		4.30	%
Discount rate for pension expense		4.30	%		3.70	%
Expected long-term rate of return on assets		6.53	%		6.53	%
Rate of compensation increase		0.00	%		0.00	%

The discount rate for

December 31, 2019

and

2018

was calculated using a proprietary yield curve based on above median AA rated corporate bonds. The expected long-term rate-of-return on assets rate is the best estimate of future expected return for the asset pool, given the expected returns and allocation targets for the various classes of assets.

Based on risk and return history for capital markets along with asset allocation risk and return projections, the following asset allocation guidelines were developed for the Plan:

Asset Category	Minimum		Maximum
Equity securities		50%		80%
Fixed income		20%		50%
Cash equivalents		0%		5%

The Plan's asset allocations at

December 31, 2019

and

2018

by asset category are as follows:

Asset Category	2019		2018
Equity securities*		66%		64%
Debt securities*		33%		35%
Other/Cash		1%		1%

*May

include mutual funds comprised of both stocks and bonds.

The fundamental investment objective of the Plan is to generate a consistent total investment return sufficient to pay Plan benefits to retired employees while minimizing the long-term cost to the Company. The long-term (

years and beyond) Plan asset growth objective is to achieve a rate of return that exceeds the actuarial interest assumption after fees and expenses.

Because of the Company's long-term investment objectives, the Plan administrator is directed to resist being reactive to short-term capital market developments and to maintain an asset mix that is continuously rebalanced to adhere to the plan investment mix guidelines. The Plan's investment goal is to protect the assets' long-term purchasing power. The Plan's assets are managed in a manner that emphasizes a higher exposure to equity markets versus other asset classes. It is expected that such a strategy will provide a higher probability of meeting the plan's actuarial rate of return assumption over time.

The following table presents major categories of plan assets as of

December 31, 2019,

and inputs and valuation techniques used to measure the fair value of plan assets regarding the ACS Retirement Plan:

	Fair Value Measurement at Reporting Date Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
Asset Category	Total		Level 1		Level 2		Level 3
Money market/cash	$	38	$	-	$	38	$	-
Equity securities (Investment Funds)*
International growth		2,215		2,215		-		-
U.S. small cap		1,341		1,341		-		-
U.S. medium cap		692		692		-		-
U.S. large cap		3,338		3,338		-		-
Debt securities (Investment Funds)*
Certificate of deposits		2,411		2,411		-		-
Fixed income		1,400		-		1,400		-

Total fair value	$	11,435	$	9,997	$	1,438	$	-

*May

include mutual funds comprised of both stocks and bonds.

The benefits expected to be paid in each of the next

five

years and in the aggregate for the

five

fiscal years thereafter are as follows:

2020	$	1,091
2021	$	1,095
2022	$	1,082
2023	$	1,071
2024	$	1,056
2025-2029	$	4,945

Post-retirement Health Benefit Plan

The Company has a separate executive post-retirement health benefit plan. On

December 31, 2019,

the plan was underfunded by

$381

and held

assets. The net periodic post-retirement cost for

2019

and

2018

was

$26

and

$22,

respectively.